WEST PALM BEACH, FL (HEDGECO.NET) – The Securities and Exchange Commission voted unanimously to pass new provisions against market timing abuses. According to the new rules, mutual fundestablishments must fully detail out their policies to investors with respect to market timing. Although market timing is not illegal, some fund organizations hope to deal away with it because of itsnegative impact on the performance of those investors who are classified as �long-term-investors�.
The new provision would mandate mutual funds to clearly disclose risks associated with market timing in their prospectus. The funds would also state as well, their policies towards those who use such strategies.
The new law also mandates mutual funds to fully explain when �fair value pricing� would be applied to prevent illegal timing trades. Paul Roye, the investment management division director for the SEC said, �What we’re trying to do is get to specific disclosures for these funds.� The SEC dropped their initial demand requiring funds to explain their policies for detecting market timing.
Cynthia Glassman, SEC commissioner said, �If you disclose to one, you disclose to all.� Another SEC Commissioner, Roel Campos in his statement, explained that mutual fund investors have suffered from the mutual fund scandals. Roel thinks the new rules would make a difference. He remarked, �Many investors rightly feel abused by the current scandals,� he added that the new law �will go a long way in addressing mutual fund market timing.�
Paul Oranika
Editor-in-Chief
HedgeCo.Net
Email: [email protected]
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